Raghuram Rajan Won't Serve Second Term As RBI Governor; His Exit Will Be A Sad Day For Indian Economy

Raghuram Rajan has announced that he would not be serving a second term as the Governor of the Reserve Bank of India . The announcement comes on the back of intense speculation and criticism over the international banker. Rajan has written a letter to his staff at the central bank, saying he would return to his academic career when his term ends on September 4.

"I am an academic and I have always made it clear that my ultimate home is in the realm of ideas. The approaching end of my three-year term, and of my leave at the University of Chicago, was therefore a good time to reflect on how much we had accomplished," read Rajan's letter to his RBI team.

"... on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on September 4, 2016. I will, of course, always be available to serve my country when needed," the letter added.

Rajan also listed out a number of achievements of the RBI during his tenure, such as putting in place an inflation-focused framework, 150-basis point cut in the interest rates, improving the balance sheets of banks through the Asset Quality Review, assisting the government with reform state-run bank management appointments and a restructuring of the RBI among others.

Rajan thanked his team at the RBI. "I am confident my successor will take us to new heights with your help. I will still be working with you for the next couple of months, but let me thank all of you in the RBI family in advance for your dedicated work and unflinching support. It has been a fantastic journey together!" his letter read.

Rajan's announcement comes amid intense speculation over whether he would be offered a second term by the government. BJP leader Subramanian Swamy had attacked the RBI chief, accusing him of underperformance, saying he was "not fit" to be the central bank chief and that he was not "Indian at heart". Rajan had waded clear of controversy, even as his friends in the academia defended him. His co-author Luigi Zingales had said that any other country would have "guaranteed re-confirmation" to Rajan.